Trump Cuts Off Billions Of Dollars In Cost-Sharing Payments To Insurers, Putting Obamacare Marketplaces At Risk

Only hours after signing an executive order that undermines several key aspects of the current health care law, President Trump has made good on his repeated threat to pull the plug on billions of dollars in subsidies provided by the federal government to insurers in the individual plan market.

The Affordable Care Act provides for the federal government to make significant monthly payments to insurers who participate in the individual health insurance exchanges. These subsidies — which will total around $7 billion this year — are intended to keep out-of-pocket expenses, like co-pays and deductibles, low, particularly for Americans making between 100% and 250% of the federal poverty line.

Trump has made no effort to hide his distaste for these payments, referring to them as a “bailout” for the insurance industry. Since the subsidies are not appropriated by Congress, the White House has repeatedly made the argument that it has the authority to stop the payments at any time.

The administration claims in its statement that the Department of Justice and Department of Health and Human Services have concluded that these payments are not legal, as they were not appropriated by Congress. That claim has been the subject of an ongoing legal dispute, started by a lawsuit filed in 2014 by Republican members of the House of Representatives.

“The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system,” reads the White House statement. “Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people.”

While the statement gives no definite end date for the subsidies, the Washington Post reports that they may cease as of November.

How Will This Affect Insurance Rates?
Even though rates are already locked in for the 2018 Obamacare open enrollment period that begins Nov. 1, the seeming inevitability of the end to the subsidies has already had an effect on the cost of insurance.

Without these subsidies, some insurers will certainly abandon the individual marketplace going forward, putting the structure put in place by the Affordable Care Act in serious jeopardy and possibly leaving millions of additional Americans with only one — or possibly no — insurance company to choose from in their region.

“I will not allow President Trump to once again use New York families as political pawns in his dangerous, partisan campaign to eviscerate the Affordable Care Act at any cost,” said Schneiderman.

The other option would be for Congress to do what it didn’t do when the Affordable Care Act was passed nearly a decade ago, and use the appropriations process to provide these funds to insurers. Given the hardline conservative opposition to the payments, it would require Republicans and Democrats to work together to garner sufficient support for such appropriations.